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One Way to Minimize Hiring Costs: Do More

March 3, 2015

HR-HiringMany companies today are looking to simplify and streamline their staffing practices in order to minimize the cost and inefficiencies associated with hiring. When thinking about how to make their staffing processes more efficient, many leaders are aware that implementing pre-hire assessment tools can reduce time spent by the hiring team evaluating job candidates while at the same time improve hiring decisions for relatively little cost.

However, these benefits to implementing pre-hire assessments are only possible if the assessment tool is effectively evaluating the skills and capabilities needed for success in the target job. The list of skills and capabilities to assess should be identified by doing a job analysis, which then informs how assessment tools should be configured for the target jobs.

In most organizations with multiple business units, (e.g., sales, manufacturing, research, etc.) it is unlikely that the same assessment tool would be used to screen job candidates across the business because of the differences in skills required to be successful. In addition, if candidates of different job levels are assessed (even within the same business unit), different assessment tools are typically used due to the difference in requisite skills as you move from entry level employees up to executive leadership.

Nevertheless, some organizations may seek a one-size-fits-all assessment solution for all positions in the company. In other words, they want to use the same assessment tool to screen candidates for all positions in the organization, no matter the job level or functional area.

Is this possible? Can one assessment tool significantly improve hiring decisions across all positions in a company, even if those positions require different skills and capabilities for success? This is a complex question that requires careful consideration of a number of issues related to both the validity and legal defensibility of pre-hire assessments.

The short answer to this question is that it is possible, but this practice is not recommended for two main reasons. This first has to do with the very limited options available regarding the kind of assessment tool that could be used, and the second has to do with the legal risks the organization would incur.

Chances are that a cognitive ability test will be one of the very few, if not the only, viable assessment solution that would be effective in helping to identify better candidates across all the different jobs. Even so, it will not be equally effective for all of the jobs, even if the content and/or scoring is adjusted for each job. Cognitive ability tests generally predict job success better for positions that require more thinking, decision making, and information processing, and jobs vary in the extent to which these skills are needed to succeed.

Regarding legal defensibility, cognitive ability tests pose more risk for causing adverse impact against some minority groups than other types of tests. A legal challenge by a candidate on the basis of discrimination would require the organization to produce data on the pass rates for different groups protected under law (e.g., race/ethnicity). Any evidence suggesting the test discriminated against a protected group would require organization to demonstrate that 1) the test is valid for the target role (e.g., higher scores on the test are significantly associated with higher performance ratings), and 2) there are no alternative, equally effective tests with lower or no adverse impact.

For the reasons outlined above, organizations are generally better off using different tests to screen candidates for different jobs. This will allow the organization to find an assessment solution that is both optimally effective at identifying the best talent for each job and also minimize the risk of adverse impact.

So what are some suggested approaches to implementing pre-hire assessments when the goal is to minimize the cost and inefficiencies in staffing practices, and when there is also a premium on limiting the number of assessment solutions? Below are five key principles that can provide some guidance for meeting these goals:

  1. Prioritize positions for which implementing pre-hire assessment tools will deliver the greatest benefit to the business. In many organizations, these roles are ones that either have high volume hiring and/or high turnover (e.g., sales reps, hourly employees, first-line supervisors) or are key top leadership roles that strongly impact the direction and success of the business. The message behind this principle is that you don’t have to implement assessments all roles at the same time. If you first implement quality assessment tools for your most impactful roles, the business will see significant benefits, and you could continue expanding from there.
  1. Use assessment tools that evaluate different domains of skills and capabilities. You can certainly assess cognitive ability, as it is often one of the stronger predictors of performance. However, assessing for personality, technical and functional skills, as well as education and experience will provide a much more complete picture of a candidate’s qualifications for the role. In addition, you can minimize adverse impact often caused by assessing cognitive ability alone when taking this multifaceted approach. A job analysis will inform the kinds of capabilities to assess, and organizations should seek test developers that have strong expertise in building assessment tools that use various methods of measurement to evaluate various kinds of skills.
  1. Ensure that the assessment tool is inserted into the staffing process where it delivers the greatest value. In most cases, this is early in the staffing process, typically after an initial screening for minimum qualifications, but before face-to-face interviews. Again, the goal is to maximize efficiency, so having a hiring manager or staffing consultant interview candidates when they could later get screened out by the assessment would undermine this goal. In addition, research shows that quality assessment tools are much better at identifying candidates who will be successful on the job than even the most skilled interviewers.
  1. Validate the assessment tools with a job analysis and validation study. There is no value added to the business if the assessment is targeting the wrong capabilities. Prior to implementation, a job analysis is an absolute must to confirm the assessment content is job relevant. In addition, a predictive validation study is highly recommended after the organization has a sizeable group (about 100) of employees who have taken the assessment as a prerequisite for hire and have been on the job for at least 6 months to a year. The validation study will provide quantitative data indicating how well the test predicts job performance.
  1. When possible, use online, unproctored assessment tools. More and more organizations are turning to unproctored tests delivered via the internet, and test developers are getting better at designing unproctored tests that minimize risks to cheating or sharing of the test’s content. From an efficiency standpoint, unproctored tests reduce cost by not requiring organizations to have testing resources such as computers, tables, chairs, rooms, and proctors. In most cases an employee can be easily trained to administer the test to candidates remotely, either through a testing vendor’s online platform or through the organization’s applicant tracking system.

In summary, a one-size-fits-all assessment solution for screening candidates is generally not recommended for most organizations that have employees in different business units or functional areas, or of multiple job levels. This is because tailoring assessment solutions to the success criteria for each job brings better results to the business and also allows for finding a solution that will minimize adverse impact.

Rather than trying to find one assessment solution for all roles, it is more practical to be strategic about where and how to implement pre-hire assessments in the organization. Prioritizing roles that will benefit most from a pre-hire assessment is a key first step. Partnering with an assessment specialist who has expertise in job analysis, test construction and validation, adverse impact analyses, and who can build tests that accurately measure different kinds of capabilities will also be critical.

Finally, understanding where in the staffing process to insert pre-hire assessment so that it will add the most value, and administering it in a way that minimizes use of resources will go a long way in reducing cost as more candidates get assessed.

With the approach outlined above, project sponsors are more likely to gain early successes by focusing on the implementation of quality assessments for top priority roles. As stakeholders see the value of the new assessment program over time, the demand for expanding pre-hire assessments to other roles will increase, thereby increasing the opportunities to leverage pre-hire assessments across the company for raising the bar on hiring better talent.

5 Steps to Getting Started with Manufacturing Employee Assessment


John Fernandez, Ph.D. John Fernandez, Ph.D. was a Senior Consultant at PSI and lead the implementation of assessment programs for both selection and development. John has extensive experience working as an internal expert within HR for large companies to deliver large scale, global assessment solutions. John’s areas of expertise include project management, job analysis, assessment design & validation, and presentation of assessment results to sponsors.